I was linked to this today and I thought it was an interesting article. I highly recommend you read it. The overall theme of the article is about how people tend to be more likely to be dissatisfied with material purchases than experiential purchases. As one whose been putting lots of thought into how and what to buy, I thought I’d share some of my thoughts on the six points they explore. On to the first point:
1. Objects are easy to compare unfavorably.
I completely agree with the article on this one. They mention that experiences are often impossible to compare on level ground; my experience at a concert is completely different than yours, and thus we can both have had a great time without one being “better” than the other. People have different vacations, and many are no better or worse than others, just different. On the other hand, things are easy to compare.
If I buy a computer, I might feel better about it since I got a good deal, but it’s easy to objectively compare to other computers. One might have more RAM, or a faster processor, or a bigger hard drive. It will, most likely, be easy to find a better computer than the one you got. You may be able to get a really great car, but again, it’s easy to find better cars (most likely). Or next year’s model of your car may be better (but I’m jumping ahead here). You got that great job with a good pay; well, it’s easy to compare your salary to someone who makes 5x what you do.
This ease of comparison makes it often easier to find something better than whatever you just spent your money on. However, I believe there’s a caveat to this. If you purchase what you want because it’s what you want, not because it’s the newest or fastest or best that you can afford, but rather if you balance out what you are looking for, your price range, and the purpose of the purchase, you can alleviate some of the dissatisfaction that can result shortly after.
For example, when I was buying a laptop for school, I did about 2 months of research. I looked into what my options were and what the differences were between them. Since I was a student, I knew that the best of the best of the best was not an option. I really looked hard at what I wanted to be able to do with it, and started cutting out computers that wouldn’t be able to do those tasks. Over time I narrowed it down. I had to save a little extra since the laptop that fit all my criteria was a little more than I was hoping to spend, but I worked and saved a little longer to not compromise on my decision. Here I am, 4.5 years later, with the same laptop and I’m perfectly happy with it. Some of the new things I’m doing would be helped by getting a newer one, but in no way do I feel the need to replace it in the next year or two. Another example is that Trish and I are looking into getting bikes. We already know that we’re not getting the best bike out there. We don’t want the best bike out there; it would be spending money we would get no use out of. Rather, we’re looking for a bike that fits the tasks we want to do. In this case, the article holds true; if you go into material purchases with the experiences in mind, not the bolts and metal and plastic and material aspects, then I believe you step around potential dissatisfaction.
Ultimately, I think that if you head into material purchases with a task-oriented approach, instead of a material-oriented approach, you can alleviate some of the discontentment that may follow such a purchase.
2. A ‘maximizing’ strategy leaves us unsatisfied.
This is very true. Their explanation ties into what I was saying earlier. They explain that when people “settle” for something, they tend to be more satisfied than if they try to squeeze every dollar’s worth out of their purchase. They cite that the amount of time and energy spent in researching options can cause a lot of stress and that people can regret things more intensely if they miss a detail or something.
I think what I talked about in the last bullet point touches on this too. In the case of my laptop, I “settled” for the one I purchased. If I was going for it because it had the best processor (it did) or the best video card (it did not), I’d be sorely disappointed as Moore’s Law went as it always has and my hardware was outdated 6 months after I got it. I did spend the time researching, but instead of sorting through specifications, I sorted by the ability to do certain tasks.
There were definitely times growing up when I wanted Item X so badly, and once I had it, after a week I could care less about it. In those cases, I wasn’t really that interested in what the item did, but rather I was interested in owning the item. I think time and time again, that is a recipe for disappointment.
3. Material purchases are more likely to be re-valued.
Have you ever taken a vacation and when you got home from it, looked to see if you could do it for cheaper or get more for your money? I sure haven’t. But have you ever bought something and then looked a bit later to check up on it’s price? Many people have. Some stores will even guarantee that if the price changes in the next 6 months, you can bring yours back to get the difference. I don’t have much to say other than this is definitely true. That car you buy new is re-valued the second you drive it off the lot; you know that it’s worth 5-10% less that very instant.
This can definitely drive buyer’s remorse. However, I firmly believe that if you do what I’ve talked about thus far, and focus on the tasks or experiences you wish to partake in with whatever you’re buying, you will be less likely to re-value it; you’ll probably be far to busy doing things with it to bother spending the time doing that.
4. The new option effect.
This is probably most pronounced with electronics due to the incredibly rapid advancement of technology. If you buy a computer, there will be a substantially better computer available within 6 months.
From the article:
When Carter and Gilovich simulated this situation in the lab, participants reported that the new option effect was more disturbing when buying a watch, a pair of jeans or a laptop than when buying a holiday, movie ticket or fancy dining experience.
This is one of the reasons why “settling” for something can be a happier experience. You generally wouldn’t care if something new comes out, since you’ve accepted and are happy with what you have.
5. The reduced price effect and 6. The rival effect.
The last two points are grouped into one. Both often happen after one purchases something: either where they got it drops the price shortly after they buy it, or you hear from a friend that they got the same thing somewhere else for cheaper. For whatever reason, when it comes to purchases, we want to spend as little as possible for as much as possible. They mention that people were far less upset when it occurs with something like a movie ticket or a meal. I’ll just say again, instead of repeating myself, that these things don’t matter as much if you’re more interested in what you’re doing than what you’re getting.
So what am I getting at? Well, turns out, it’s the same thing the article does. We value our experiences and remember our experiences far more than material possessions, even if it is the material purchases that lead to the experiences. This value we place on our experiences is worth far more than “slightly better” or “slightly cheaper” things. So I would encourage that when you decide to spend money on something, think forward. Think about what you are going to use it for, and think how it can be integrated into your experiences down the road. If you can’t see it being part of experiences, it’s probably not a great purchase. If you can, if you can see it being something that will help enable good experiences down the road, then you’ll probably be much less prone to fall subject to post-purchase disappointment. You’ll be too busy out there riding your bike or making movies or climbing a mountain or cooking or doing things you love to do to worry about whether or not you could have saved a few bucks.